About 1,400 government officials and suppliers from 42 states are expected to convene in Denver on Thursday for Wal-Mart's second annual U.S. Manufacturing Summit.
It'll be the first public speaking engagement for Wal-Mart U.S. President and CEO Greg Foran since he was named as Bill Simon's replacement last month. Simon is leaving the company at the end of January.
During last year's gathering in Orlando, Fla., Wal-Mart paired suppliers with local, state and federal officials for about 300 meetings, more than a dozen of which resulted in product-makers initiating manufacturing operations in the United States. They make items such as footwear, bakeware, candles and flat-screen TVs.
Michelle Gloeckler, executive vice president of consumables and U.S. manufacturing for Wal-Mart, said about 400 meetings are scheduled to take place in Denver.
In January 2013, the company announced it would buy an additional $50 billion in American-made products in 10 years to grow U.S. manufacturing and create more U.S. jobs.
Feedback from suppliers after last year's meeting indicated that manufacturers lack U.S. sources for component parts to make their products, Gloeckler said. So at this year's gathering, Wal-Mart is hosting a trade show of sorts for about 80 makers of those component parts. They'll be organized by expertise, such as textiles, plastics and metals.
"We're incredibly excited about the ability of our suppliers to shop for component parts all in one day, one location, under one roof," she said.
An example of a component part for textile-makers would be a fastener, a snap or a zipper, Gloeckler said. A company making patio furniture may be importing the frames, another company making appliances could be importing motors, or another making shower curtains could be importing grommets. The Federal Trade Commission mandates that a product has to be made entirely of American-made parts to be called American-made.
Bicycle-maker Kent International Inc. of Parsippany, N.J., needs component parts. Where there were once several places to get parts, now there is only one, and that supplier is not competitive, Kent Chairman and CEO Arnold Kamler said Monday.
Kent is the poster child for Wal-Mart's mission to grow U.S. manufacturing. The company has imported bicycles since 1958 but also assembled bicycles in the U.S. from 1978 to 1990. Then the cost of making the bicycles in China got so low that it became cost-prohibitive to do it here, Kamler said.
"It just wouldn't work anymore," he said. "So we stopped with the idea that we would probably never manufacture in the United States again."
It was Wal-Mart's initiative -- and a meeting that a Wal-Mart bicycle buyer set up with South Carolina Gov. Nikki Haley -- that changed Kamler's mind. Kent is making a $4.3 million capital investment in a plant in Clarendon County, S.C., and will hire a minimum of 175 workers by 2017. The plant is expected to be up and operating this October, and when the first bicycles roll off the line, they'll be the only ones assembled in the United States.
China is looking less and less attractive as a source for made goods. Kamler said the cost of electricity and natural gas in China is three times more expensive than it is in South Carolina, and the cost of real estate is higher in China. Labor remains cheaper but is expected to rise at a rate of about 20 percent per year, he said.
Kent's plan is to maintain its present level of imports from China and use the domestic production to steal business away from other bicycle importers.
"If the market dictates that we need to make more bikes here to succeed, we'll do that," the CEO said. He said there will not likely be a time when Kent can get all its parts in the U.S. and that some will always have to be imported.
"We're trying to get to the level where we can properly say 'assembled in USA,'" he said. "The theme of our whole operation is that we're bring jobs back to America, which is really the bottom line."
Is it possible to make a product that is all American-made? Yes, said Mark Muro, senior fellow and policy director of the Metropolitan Policy Program at the Brookings Institute.
"I think that we will see more and more American sourcing and ideally greater percentages of content coming from the United States," Muro said. "I don't think it's likely or necessary to have 100 percent American sourcing.
"I think there's room for much more, though," he added.
Innovation also is key to accelerating the mission to bring more manufacturing back to the States, Wal-Mart has said. At the U.S. Manufacturing Summit, Wal-Mart will announce the first grantees from the $10 million Walmart U.S. Manufacturing Innovation Fund, a partnership between Wal-Mart, the Wal-mart Foundation and the United States Conference of Mayors. The fund is designed to help make it both easier and more competitive for manufacturers to make household goods on domestic soil. Grants are to be awarded over the next five years.
The gathering also will offer an education series, with topics to include robotics and automation, contract manufacturing, product compliance, the energy advantage, working with government and the economics of evaluating U.S. manufacturing, Gloeckler said.
Business on 08/12/2014